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Analysis Of financial Statements of

State bank of India


A PROJECT REPORT

Under the guidance Of


Mr. Sharad Shukla

Submitted by
Prateek Oberai
Roll no. 1302002739

in partial fulfillment o f the requirement


for the award of the degree

Of
MBA
IN
[Finance]

January 2015

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Bonafide Certificate

BONAFIDE CERTIFICATE

Certified that this project report titled Analysis Of financial Statements


of State bank of India is the bonafide work of Prateek Oberai, who
carried out the project work under my supervision.

SIGNATURE

SIGNATURE

Mr. Rama Raman Pandey

Mr. Sharad Shukla

HEAD OF THE DEPARTMENT

FACULTY IN CHARGE

HLC Academy 2nd floor Ajanta


Complex Alambagh, Lucknow

HLC Academy 2nd floor Ajanta


Complex Alambagh, Lucknow

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ACKNOWLEDGEMENT

In order to accomplish a task, facts, situations and persons integrate


together to form a background. Greatness lies in being grateful and not
in being great. This research report is a result of contribution of distinct
personalities whose guidance here made my effort a producing one, as
no task is a single mans effort.
I would like to express my deep sense of gratitude to the
respectable

guide

distinguished

personalities

for

their

precious

suggestions and encouragement during the project.


The experience which is gained by me during this project is
essential for me at this turning point of my career.
I am thankful to my project guides Mr. Sharad Shukla, for kind
support and supervision under whose kind & constant guidance I had the
opportunity to expand my horizons and view the various problems from
different prospective. I am also thanking him for sparing his valuable
time to listen my problems and difficulties faced by me during the
completion of this project report.

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PREFACE

It was a privilege for us to work in a reputed organization- This has


given us an opportunity to work in a truly professional environment
where team work score over individual effort, where there is a helpful
atmosphere.

A well planned, properly executed and evaluated training

helps a lot in inoculating good work culture. The project on Analysis Of


financial Statements of State bank of India .
has been made to facilitate effective understanding about the marketing
aspects.
The project training has provided me an opportunity to gain
practical experience, which has helped me to increase my sphere of
knowledge to a greater extent. I have tried to summarize all our
experience and knowledge acquired up till now, in this report. This
project is a keen effort to obtain the expected results and fulfill all the
information required.
At the end annexure and bibliography are given for
effective understanding.
Thank you for your interest in my project report.

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CONTENTS
Serial No.

Headings

Page No.

1.

Introduction

2.

Financial Statement Analysis

65

3.

Profit & loss A/c

66

4.

Cash Flow

69

5.

Balance Sheet

70

6.

Ratio Analysis

74

7.

Earning Quality

85

8.

Summary of Ratios

90

9.

Conclusion

94

10.

Suggestion

96

11.

References

98

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LIST OF TABLES
Serial No.

List of Tables

Page No.

1.

Table:

1.1

74

2.

Table:

1.2

76

3.

Table:

1.3

78

4.

Table:

1.4

79

5.

Table:

1.5

80

6.

Table:

2.1

81

7.

Table:

2.2

83

8.

Table:

3.1

85

9.

Table:

3.2

87

10.

Table:

3.3

88

11.

Table:

3.4

89

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LIST OF FIGURES
Serial No.

List of Figures

Page No.

1.

Figure: 1.1

74

2.

Figure: 1.2

76

3.

Figure: 1.3

78

4.

Figure: 1.4

79

5.

Figure: 1.5

80

6.

Figure: 2.1

81

7.

Figure: 2.2

83

8.

Figure: 3.1

85

9.

Figure: 3.2

87

10.

Figure: 3.3

88

11.

Figure: 3.4

89

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INTRODUCTION
INTRODUCTION

General introduction about financial sector


The financial sector is in a process of rapid transformation. Reforms are
continuing as part of the overall structural reforms aimed at improving
the productivity and efficiency of the economy. The role of an integrated
financial infrastructure is to stimulate and sustain economic growth.

The US$ 28 billion Indian financial sector has grown at around 15 per
cent and has displayed stability for the last several years, even when other
markets in the Asian region were facing a crisis. This stability was
ensured through the resilience that has been built into the system over
time. The financial sector has kept pace with the growing needs of
corporate and other borrowers. Banks, capital market participants and
insurers have developed a wide range of products and services to suit
varied customer requirements. The Reserve Bank of India (RBI) has
successfully introduced a regime where interest rates are more in line
with market forces.
Financial institutions have combated the reduction in interest rates and
pressure on their margins by constantly innovating and targeting
attractive consumer segments. Banks and trade financiers have also
played an important role in promoting foreign trade of the country.
Capital Market

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The Indian capital markets have witnessed a transformation over the last
decade. India is now placed among the mature markets of the world. Key
progressive initiatives in recent years include:
The depository and share dematerialisation systems that have enhanced
the efficiency of the transaction cycle
Replacing the flexible, but often exploited, forward trading mechanism
with rolling settlement, to bring about transparency
The infotech-driven National Stock Exchange (NSE) with a national
presence (for the benefit of investors across locations) and other
initiatives to enhance the quality of financial disclosures.
Corporatization of stock exchanges.
The Money and Exchange Board of India (SEBI) has effectively been
functioning as an independent regulator with statutory powers.
Indian capital markets have rewarded Foreign Institutional Investors
(FIIs) with attractive valuations and increasing returns.
The Mumbai Stock Exchange continues to be the premier exchange in
the country with an increase in market capitalisation from US$ 40 billion
in 1990-1991 to US$ 203 billion in 1999-2000. The stock exchange has
about 6,000 listed companies and an average daily volume of about a
billion dollars
Many new instruments have been introduced in the markets, including
index futures, index options, derivatives and options and futures in select
stocks.
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Origin and Development of the industry


The Bombay Stock Exchange (BSE) is known as the oldest exchange in
Asia. It traces its history to the 1850s, when stockbrokers would gather
under banyan trees in front of Mumbais Town Hall. The location of
these meetings changed many times, as the number of brokers constantly
increased. The group eventually moved to Dalal Street in 1874 and in
1875 became an official organization known as The Native Share &
Stock Brokers Association. In 1956, the BSE became the first stock
exchange to be recognized by the Indian Government under the Money
Contracts Regulation Act.
The Bombay Stock Exchange developed the BSE Sensex in 1986, giving
the BSE a means to measure overall performance of the exchange. In
2000 the BSE used this index to open its derivatives market, trading
Sensex futures contracts. The development of Sensex options along with
equity derivatives followed in 2001 and 2002, expanding the BSEs
trading platform.
Historically an open-cry floor trading exchange, the Bombay Stock
Exchange switched to an electronic trading system in 1995. It took the
exchange only fifty days to make this transition.
Capital market reforms in India and the launch of the Money and
Exchange Board of India (SEBI) accelerated the integration of the second
Indian stock exchange called the National Stock Exchange (NSE) in
1992. After a few years of operations, the NSE has become the largest
stock exchange in India.

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Three segments of the NSE trading platform were established one after
another. The Wholesale Debt Market (WDM) commenced operations in
June 1994 and the Capital Market (CM) segment was opened at the end
of 1994. Finally, the Futures and Options segment began operating in
2000. Today the NSE takes the 14th position in the top 40 futures
exchanges in the world.
In 1996, the National Stock Exchange of India launched S&P CNX Nifty
and CNX Junior Indices that make up 100 most liquid stocks in India.
CNX Nifty is a diversified index of 50 stocks from 25 different economy
sectors. The Indices are owned and managed by India Index Services and
Products Ltd (IISL) that has a consulting and licensing agreement with
Standard & Poors.
In 1998, the National Stock Exchange of India launched its web-site and
was the first exchange in India that started trading stock on the Internet in
2000. The NSE has also proved its leadership in the Indian financial
market by gaining many awards such as Best IT Usage Award by
Computer Society in India (in 1996 and 1997) and CHIP Web Award by
CHIP magazine (1999).
The National Stock Exchange of India was promoted by leading Financial
institutions at the behest of the Government of India, and was
incorporated in November 1992 as a tax-paying company. In April 1993,
it was recognized as a stock exchange under the Money Contracts
(Regulation) Act, 1956. NSE commenced operations in the Wholesale
Debt Market (WDM) segment in June 1994. The Capital Market
(Equities) segment of the NSE commenced operations in November

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1994, while operations in the Derivatives segment commenced in June


2000.
Since the early 1950s till the early 1990s, Indian policy makers had been
nourishing the goal of Socialist pattern of society. They had been
following the development planning strategy of the former Soviet Russia
in a mixed economic framework. From July 1991, in the face of an
unprecedented foreign exchange crisis, Indian economy started
experiencing an IMF-World Bank dictated regime of liberalisation.
One aspect of this is financial liberalisation. There is a move towards
privatisation of nationalised banks these banks are selling their shares in
the stock market. Transnational banks are encouraged to operate in the
Indian banking sector. Attempts are made to attract foreign direct
investment in different sectors. There is an increasing entry of foreign
portfolio capital due to stock market liberalisation. People are encouraged
to invest in stocks through income tax benefits and abolition of capital
gains tax. There is a move to develop a national pension fund which will
be invested in different stocks to get returns out of which pension will be
provided to retired people. It is expected that boosting up of stock market
will accelerate the process of capital accumulation and growth.
Stock market development has been an important part of financial
liberalisation in the less developed countries (LDCs). In the proliberalisation circle, stock market is assigned to play an important role in
the capitalist development of LDCs.
There are many studies supporting the positive link between stock market
development and growth. Let us mention some of the recent studies. One
important study was undertaken by Levine and Zervos (1998). Their
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cross-country study found that the Development of banks and stock


markets has a positive effect on growth. In another study Levine (2003)
argued that although theory provides ambiguous relationship between
stock market liquidity and economic growth, the cross-country data for
49 countries over the period 1976-93 suggest a strong and positive
relationship (see also Levine, 2001). Henry (2000) studied a sample of 11
LDCs and observed that stock market liberalisations lead to private
investment boom. Recently, Bekaert et al (2005) analysed data of a large
number of countries and observed that the stock market liberalisation
leads to an approximate 1 % increase in annual real per capita GDP
growth.
There are some economists who are sceptical. Long time back Keynes
(1936) compared the stock market with casino and commented: when the
capital development of a country becomes the by-product of the activities
of a casino, the job is likely to be ill-done.
Referring to the study of World Bank (1993) , Singh (1997) pointed out
that stock markets have played little role in the post-war industrialisation
of Japan, Korea and Taiwan. He argued that the recent move towards
stock market liberalisation is unlikely to help in achieving quicker
industrialisation and faster long-term economic growth in most of the
LDCs.
In this perspective this study examines the nature of relationship between
stock market and growth through capital accumulation in India.
Growth and Present Status of the industry

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The ever-growing and fast-maturing 'India Market' is a lucrative business


destination for developed countries. With 7-8% of GDP growth, huge
analytical, young and English speaking work force the 'pull' for
opportunities are luring. The bandwidth of 'India Market' is enviably wide
and very deep.
'Markets in India' are well protected by legal guidelines and efficient
administrators. With a liberal and proactive government at the center the
road ahead for 'Markets of India' is very rosy. 'Market India' has
witnessed exponential growth over past one and half decade. Foreseeing
sure and substantial returns on investments (ROI) companies are proactively listing on the stock market indexes. Government agencies once
much hated for red tape and bribes has shed its image. Professionalism is
their new mantra. Public Enterprises like IOC, ONGC, BHEL, NTPC,
SAIL, MTNL, BPCL, HPCL and GAIL, SBI, LIC, Hindustan
Antibiotics Limited, Air India etc. to name a few, are giving Private
Indian companies a good run for their Money. Private giants like Reliance
Industries Limited, Infosys, Tata, Birla Corporation, Jet Airways,
Ranbaxy, Biocon, Bajaj Auto, ICICI are breaking their own records every
financial years.
Indian Equity Market at present is a lucrative field for the investors and
investing in Indian stocks are profitable for not only the long and
medium-term investors, but also the position traders, short-term swing
traders and also very short term intra-day traders. In terms of market
capitalization, there are over 2500 companies in the BSE chart list with
the Reliance Industries Limited at the top. There are about 22 stock
exchanges in India which regulates the market trends of different stocks.
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Generally the bigger companies are listed with the NSE and the BSE, but
there is the OTCEI or the Over the Counter Exchange of India, which
lists the medium and small sized companies. There is the SEBI or the
Money and Exchange Board of India which supervises the functioning of
the stock markets in India.
Thus, the growing financial capital markets of India being encouraged by
domestic and foreign investments is becoming a profitable business more
with each day. If all the economic parameters are unchanged Indian
Equity Market will be conducive for the growth of private equities and
this will lead to an overall improvement in the Indian economy.
Indian Stock Market including both NSE-National Stock Exchange and
the BSE-Bombay Stock Exchange have certainly taken a tremendous
beating in the past few weeks. We are sure most of us here knew that the
correction in the trading curve was round the corner which would be
healthy, and the markets would bounce back with the help of mutual fund
investments & buying of Indian stocks again. However the anticipation
went wrong, and the US recession story along with global and Indian
commodity prices have added fuel to the global equity market turmoil on
a whole.
1.5 Future of the industry
The stock market is booming in spite of the low agriculture output. The
monsoon is good in an overall sense but still the question remains who
takes the credit? The answer is the karma of the people. I appreciate the
Indian politicians and the industrialists who being pawns of destiny are
doing things positive and productive. India, as a country is running a very
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good period and the position of planets in the transit are giving wonderful
results.
Less than one percent of population own stocks and less than 1000
individuals control the market, the majority being the FIIs, the promoters
of the company. The credit should go to media for making stock market
headlines.
In any case if you are long terms players then step-in and buy now and
forget for another 10 years. You will make a killing in the Indian markets.
Most of the tech companies and the main index will do well but slightly
in the lower side of expectations.

1.6 Structure, Processes and Governance of the industry


Under this, various processes involved in the industry will be discussed.
Other than this, the bodies governing the industry will also be brief upon
and and an endeavour will be made to understand the whole structure of
the industry.

1.6.1 Dematerialized Trading


Indian investor community has undergone see changes in the past few
years. India now has a very large investor population and ever increasing
volumes of trades. However, this continuous growth in activities has also
increased problems associated with stock trading. Most of these problems
arise due to the intrinsic nature of paper based trading and settlement, like
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theft or loss of share certificates. This system requires handling of huge


volumes of paper leading to increased costs and inefficiencies. Risk
exposure of the investor due to this trading in paper.
Some of these risks are:
1.

Delay in transfer of shares.

2.

Possibility of forgery on various documents leading to bad


deliveries, legal disputes etc.

3.

Possibility of theft of share certificates in the market.

4.

Multiplication or loss of share certificates in transit.

5.

Prevalence of fake certificates in the market.

The physical form of holding and trading in Money also acts as a


bottleneck for broking community in capital market operations.
The introduction of NSE and BOLT has increased the reach of capital
market manifolds. The increase in number of investors participating in
the capital market has increased the possibility of being hit by a bad
delivery. The cost and time spent by the brokers for rectification of these
bad deliveries tends to be higher with the geographical spread of the
clients. The increase in trade volumes lead to exponential rise in the back
office operations thus limiting the growth potential of the broking
members. The inconvenience faced by investors (in areas that are far
flung and away from the main metros) in settlement of trade also limits
the opportunity for such investors, especially in participating in auction
trading. This has made the investors as well as broker wary of Indian
capital market. In this scenario, dematerialized trading is certainly a
welcome move.
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1.6.2 What is Dematerialization?


Dematerialization or Demat is a process whereby your Money like
shares, debentures etc, are converted into electronic data and stored in
computers by a Depository. Money registered in your name are
surrendered to depository participant (DP) and these are sent to the
respective companies who will cancel them after Dematerialization and
credit your depository account with the DP.
The Money on Dematerialization appear as balances in your depository
account. These balances are transferable like physical shares. If at a later
date, you wish to have these Demat Money converted back into paper
certificates; the Depository helps you to do this.
Dematerialization is the process of converting the Money held in physical
form (certificates) to an equivalent number of Money in electronic form
and crediting the same to the investors Demat account. Dematerialized
Money do not have any certificate numbers or distinctive numbers and
are dealt only in quantity i.e.; the Money are fungible.
Dematerialization of your holdings is not mandatory. You can hold your
secure Demat form or in physical form. You can also keep part of your
holdings (in the same script) in Demat form & part in physical form.
However, Money specified by SEBI can be delivered only in Demat form
in the stock exchanges connected to NSDL and / or CDSL.
The Process
1.

Surrendering of certificate to Depository Participants for


dematerialization.
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2.

NSDL is informed by the DP through electronic connectivity.

3.

Original share certificates are submitted to the registrar by the


DP.

4.

The request for dematerialization from NSDL to the register.

5.

The registrar credits an equivalent number of shares in the


account and informs NSDL.

6.

The NSDL updates its own account and the depository


participants are informed.

1.6.3 Rematerialisation
Sometimes the investor may like to convert his electronic holdings back
into physical share certificate. The process undertaken for this purpose is
called rematerialisation. The investor has to make a request to the
depository participant for rematerialisation. The depository participant
puts forward the request to NSDL after verifying whether the investor in
having necessary security balances. NSDL in turn will intimate the
registrar who prints the certificate and dispatch the same to the investor.
The certificate has a new range of certificate numbers and new folio
number.
The Process
1.

Investor requests the DP for rematerialisation.

2.

The depository participant informs it to the NSDL.

3.

NSDL intimates the Registrar.


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4.

The Registrar of the company prints certificates with new


number and informs NSDL.

5.

NSDL adjusts its account and passes on the details to the DP.

6.

The certificates are dispatched to the investor.

1.6.4 What is Depository?


Depository functions like a Money bank, where the dematerialized
physical Money are traded and held in custody. This facilitates faster, risk
free and low cost settlement. Depository is much like a bank and
performs many activities that are similar to a bank. Following table
compares the two.
Bank

Depository

Holds funds in accounts

Holds Money in account

Transfers funds between accounts

Transfers Money between accounts

Transfers without handling Money

Transfers without handling Money

Safekeeping of Money

Safekeeping of Money

1.6.5 NSDL and CDSL


At present there are two depositories in India, National Money
Depository Limited (NSDL) and Central Depository Services Limited
(CDSL). NSDL is the first Indian depository; it was inaugurated in
November 1996. NSDL was set up with an initial capital of US$28mn,
promoted by Industrial Development Bank of India (IDBI), Unit Trust of
India (UTI) and National Stock Exchange of India Ltd. (NSEIL). Later,
State Bank of India (SBI) also became a shareholder.
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The other depository is Central Depository Services Limited (CDSL). It


is still in the process of linking with the stock exchanges. It has registered
around 20 DPs and has signed up with 40 companies. It had received a
certificate of commencement of business from SEBI on February 8, 1999.
These depositories have appointed different Depository Participants (DP)
for them. An investor can open an account with any of the depositories
DP. But transfers arising out of trades on the stock exchanges can take
place only amongst account-holders with NSDLs DPs. This is because
only NSDL is linked to the stock exchanges (nine of them including the
main ones-National Stock Exchange and Bombay Stock Exchange).
In order to facilitate transfers between investors having accounts in the
two existing depositories in the country the Money and Exchange Board
of India has asked all stock exchanges to link up with the depositories.
SEBI has also directed the companies registrar and transfer agents to
effect change of registered ownership in its books within two hours of
receiving a transfer request from the depositories. Once connected to both
the depositories the stock exchanges have also to ensure that interdepository transfers take place smoothly. It also involves the two
depositories connecting with each other. The NSDL and CDSL have
signed an agreement for inter-depository connectivity.

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1.6.5 What is a DP?


A

depository

is

like

bank

where

Money

are

held

in

electronic(dematerialized) form. In India, there are two Depositories


National Money Depositories Limited (NSDL) and Central Depository
Services Limited (CSDL).
Under the Depositories Act, investors can avail of the services of the
Depositories through Depository Participants (DP) such as ICICI bank.
DPs are like bank branches wherein shares in physical form need to be
deposited for converting the same to electronic (Demat) form.
NSDL carries out its activities through various functionaries called
business partners who include Depository Participants (DPs), issuing
corporate

and

their

Registrars

and

Transfer

Agents,

Clearing

corporations/Clearing Houses etc. NSDL is electronically linked to each


of these business partners via a satellite link through Very Small Aperture
Terminals (VSATs). The entire integrated system (including the VSAT
linkups and the software at NSDL and each business partners end) has
been named as the NEST [National Electronic Settlement & Transfer]
system.
The investor interacts with the depository through a depository
participant of NSDL. A DP can be a bank, financial institution, a
custodian or a broker.
Just as one opens a bank account in order to avail of the services of a
bank, an investor opens a depository account with a depository
participant in order to avail of depository facilities.

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1.6.6 How to open a bank account with a DP


Opening a depository account is as simple as opening a bank account.
You can open a depository account with any DP convenient to you.
To open an account you have to:
1. Fill up the account opening form, which is available with the DP.
2. Sign the DP-client agreement, which defines the rights and duties
of the DP and the person wishing to open the account.
3. Receive your client account number (client ID).
4. This client ID along with your DP ID gives you a unique
identification in the Depository system
There is no restriction on the number of depository accounts a person can
open. However, if your existing physical shares are in joint names, you
have to open the account in the same order of names before you submit
your share certificates for demat. A sole holder of the share certificates
cannot add more names as joint holders at the time of dematerializing his
share certificates.
However, if the investor wants to transfer the ownership from his
individual name to a joint name, he should first open an account as the
sole holder (account A) and dematerialize the share certificates. He
should then open another depository account (account B) in which he is
the first holder and the other person is the second holder and make an off
market transfer of the shares from the account A to account B. The
investor will incur a charge on this transaction. Alternatively, the
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certificates can be transferred to the joint ownership and then sent for
Dematerialization.
Right now, as per the Companies Act, there is no nomination facility for
shares (whether in the physical or in the electronic form). The nomination
facility for shares can be availed of only when the relevant provisions in
the Companies Act are amended. NSDL captures the details of the
nominee when the account is opened so as to offer the facility as soon as
the relevant amendments are effected in the Law.
A client can choose to open more than one account with same DP. In
addition to this, he has a choice of opening accounts with more than one
DP. However a
broker can open just one Clearing Member account per card/ stock
exchange for clearing purpose, but he can still open multiple beneficiary
accounts Beneficiary is the personal account wherein brokers can keep
their personal holdings.
A broker has only one Clearing Member-pool-account. One Clearing
Member pool account is opened per card/ stock exchange to settle trades
in the dematerialized form. The Clearing Corporation/ House just deals
with one designated account for pay-in and payout and the broker's
clients know to which account they have to deliver and receive Money
from.
A clearing member cannot hold his personal holdings in his clearing
member account. A broker may deal in the depository system as a
clearing member only through a special account, known as the Clearing
Member account. This account can be used only for clearing purposes
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and not for holding his own Money in it. As this is a transitory account,
the Money held in this account are not eligible for corporate actions.
Therefore, the broker will have to open a separate beneficiary owner
account to hold his investments.
There is no compulsion for the client to open his account with the same
DP as that of his broker. Even if he has an account with another DP, he
can carry out normal business with his broker. There is no loss in
operational efficiency. But it is possible that opening account with his
broker's DP may work out to his advantage, as some DPs may offer
special charge structure if the broker and his clients are dealing through
him.

1.6.7 Trading
Trading in dematerialized Money is quite similar to trading in physical
Money. The major difference is that at the time of settlement, instead of
delivery/ receipt of Money in the physical form, it is done through
account transfer.
An investor cannot trade in dematerialized Money through his DP.
Trading at the stock exchanges can be done only through a registered
trading member (broker) of the stock exchange irrespective of whether
the Money are held in physical or dematerialized form. DPs role will only
be to facilitate settlement of trade in the dematerialized form, by
transferring Money from and to the account of the investor, for selling
and buying respectively.

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Trading in dematerialized Money is presently available at NSE, BSE,


CSE, DSE,LSE, MSE, ISE & OTCEI. These exchanges have a segment
exclusive for trading in dematerialized Money and a segment where
trades could be settled either in the physical or in the dematerialized form
as per the choice of the delivering client. In unified (erstwhile - physical)
segment Money can be delivered either in the physical form or in the
dematerialized form at the choice of the delivering party.
However, Money that have to be mandatorily settled in demat form (both
by institutional investors & all category of investors) cannot be settled in
physical form. Also for Money that have to be mandatorily settled in
demat form by all categories of investors the concept of market lot is
eliminated i.e. the tradable lot is one share from the date they become
compulsory.

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1.6.8 Settlement
The settlement of trades in the stock exchanges is undertaken by the
clearing corporation (CC)/ clearing house (CH) of the corresponding
stock exchanges. While the settlement of dematerialized Money is
effected through depository, the funds settlement is effected through the
clearing banks. The clearing members directly with the CC/ CH settle the
physical Money.
Exclusive Demat segment follows rolling settlement (T+5) cycle and the
unified (erstwhile - physical) segment follows account period settlement
cycle. In case of rolling settlement cycle, the account period is reduced to
one day.

In case of settlement of trades done in exclusive Demat segments, the


pay-in and pay out of funds and Money are effected on the same day
afternoon and evening (same day) thus reducing the blockage of funds
and limiting exposure to the clearing corporation.

Settlement of funds is effected through the clearing banks and


depository plays no role in this.

Settlement of Money is effected through NSDL depository system.

Clearing and settlement of the regular market trades is affected


through the clearing members of the clearinghouses of respective
stock exchanges. All trading members of stock exchanges are clearing
members of clearing houses. In addition, for settlement of institutional
trades, custodians are also allowed to act as clearing members.

Clearing members of clearinghouse, dealing in dematerialized Money


are expected to open a clearing account with any DP for the purpose
of settling trades in dematerialized Money. As, in the mixed (unified)
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segment, there is a possibility for all clearing members to receive


dematerialized Money, they are expected to open clearing accounts.

If there is any short delivery at the time of pay-in of Money, these


short positions are auctioned in the Demat segment as done in the
Unified (erstwhile-physical) segment.

For trades executed on Wednesday (TD 1):

Final/ Net obligation statement download - Friday (T+2nd working


day)

Settlement day (SD 1) i.e. pay in and pay out of funds and Money next Wednesday (T+5th working day)

Auction trade day (ATD 1) - next Thursday (T+6th working day)

Auction settlement day (ASD 1) - Monday (2nd working day from


auction trade day i.e. T+8th working day)

Page 28

Similarly, for trades executed on Thursday (TD 2):

Final/ Net obligation statement download - Monday (T+2nd


working day)

Settlement day (SD 2) - next Thursday (T+5th working day)

Auction trade day (ATD 2) - next Friday (T+6th working day)

Auction settlement day (ASD 2) - Tuesday (2nd working day from


auction trade day i.e. T+8th working day)

Page 29

COMPANY
PROFILE

Page 30

INDUSTRY OVERVIEW
History:
Banking in India has its origin as carry as the Vedic period. It is believed
that the transition from money lending to banking must have occurred
even before Manu, the great Hindu jurist, who has devoted a section of
his work to deposits and advances and laid down rules relating to the
interest. During the mogal period, the indigenous bankers played a very
important role in lending money and financing foreign trade and
commerce. During the days of East India Company, it was to turn of the
agency houses top carry on the banking business. The general bank of
India was the first joint stock bank to be established in the year 1786.The
others which followed were the Bank of Hindustan and the Bengal Bank.
The Bank of Hindustan is reported to have continued till 1906, while the
other two failed in the meantime. In the first half of the 19 th Century the
East India Company established three banks; The Bank of Bengal in
1809, The Bank of Bombay in 1840 and The Bank of Madras in
1843.These three banks also known as presidency banks and were
independent units and functioned well. These three banks were
amalgamated in 1920 and The Imperial Bank of India was established on
the 27th Jan 1921, with the passing of the SBI Act in 1955, the
undertaking of The Imperial Bank of India was taken over by the newly
constituted SBI. The Reserve Bank which is the Central Bank was created
in 1935 by passing of RBI Act 1934, in the wake of swadeshi movement,
a number of banks with Indian Management were established in the
country namely Punjab National Bank Ltd, Bank of India Ltd, PUBJAB
NATIONAL BANK Ltd, Indian Bank Ltd, The Bank of Baroda Ltd, The
Central Bank of India Ltd .On July 19th 1969, 14 Major Banks of the
country were nationalized and in 15th April 1980 six more commercial
Page 31

private sector banks were also taken over by the government. The Indian
Banking industry, which is governed by the Banking Regulation Act of
India 1949, can be broadly classified into two major categories, nonscheduled banks and scheduled banks. Scheduled Banks comprise
commercial banks and the co-operative banks.
The first phase of financial reforms resulted in the nationalization of 14
major banks in 1969 and resulted in a shift from class banking to mass
banking. This in turn resulted in the significant growth in the
geographical coverage of banks. Every bank had to earmark a min
percentage of their loan portfolio to sectors identified as priority sectors
the manufacturing sector also grew during the 1970s in protected
environments and the banking sector was a critical source. The next wave
of reforms saw the nationalization of 6 more commercial banks in 1980
since then the number of scheduled commercial banks increased fourfold and the number of bank branches increased to eight fold.
After the second phase of financial sector reforms and liberalization of
the sector in the early nineties. The PSBs found it extremely difficult to
complete with the new private sector banks and the foreign banks. The
new private sector first made their appearance after the guidelines
permitting them were issued in January 1993.

The Indian Banking System:


Banking in our country is already witnessing the sea changes as the
banking sector seeks new technology and its applications. The best port is
that the benefits are beginning to reach the masses. Earlier this domain
was the preserve of very few organizations. Foreign banks with heavy
investments in technology started giving some Out of the world
customer services. But, such services were available only to selected fewPage 32

the very large account holders. Then came the liberalization and with it a
multitude of private banks, a large segment of the urban population now
requires minimal time and space for its banking needs.
Automated teller machines or popularly known as ATM are the three
alphabets that have changed the concept of banking like nothing before.
Instead of tellers handling your own cash, today there are efficient
machines that dont talk but just dispense cash. Under the
Reserve Bank of India Act 1934, banks are classified as scheduled banks
and non-scheduled banks. The scheduled banks are those, which are
entered in the Second Schedule of RBI Act, 1934. Such banks are those,
which have paid- up capital and reserves of an aggregate value of not less
then Rs.5 lacs and which satisfy RBI that their affairs are carried out in
the interest of their depositors. All commercial banks Indian and Foreign,
regional rural banks and state co-operative banks are Scheduled banks.
Non Scheduled banks are those, which have not been included in the
Second Schedule of the RBI Act, 1934.

The organized banking system in India can be broadly classified into


three categories: (i) Commercial Banks (ii) Regional Rural Banks and
(iii) Co-operative banks. The Reserve Bank of India is the supreme
monetary and banking authority in the country and has the responsibility
to control the banking system in the country. It keeps the reserves of all
commercial banks and hence is known as the Reserve Bank.

Page 33

Current scenario:Currently (2007), the overall banking in India is considered as fairly


mature in terms of supply, product range and reach - even though
reach in rural India still remains a challenge for the private sector
and foreign banks. Even in terms of quality of assets and
Capital adequacy, Indian banks are considered to have clean, strong
and transparent balance sheets - as compared to other banks in
comparable economies in its region. The Reserve Bank of India is an
autonomous body, with minimal pressure from the Government

With the growth in the Indian economy expected to be strong for quite
some time especially in its services sector, the demand for banking
services especially retail banking, mortgages and investment services are
expected to be strong. Mergers & Acquisitions., takeovers, are much
more in action in India.
One of the classical economic functions of the banking industry that has
remained virtually unchanged over the centuries is lending. On the one
hand, competition has had considerable adverse impact on the margins,
which lenders have enjoyed, but on the other hand technology has to
some extent reduced the cost of delivery of various products and services.

Page 34

Banks play important role in economic development of a country, like:


Banks mobilise the small savings of the people and make them
available for productive purposes.
Promotes the habit of savings among the people thereby offering
attractive rates of interests on their deposits.
Provides safety and security to the surplus money of the depositors
and as well provides a convenient and economical method of payment.
Banks provide convenient means of transfer of fund from one place to
another.
Helps the movement of capital from regions where it is not very useful
to regions where it can be more useful.
Banks advances exposure in trade and commerce, industry and
agriculture by knowing their financial requirements and prospects.
Bank acts as an intermediary between the depositors and the investors.
Bank also acts as mediator between exporter and importer who does
foreign trades.

Page 35

Chart Showing Three Different Sectors of Banks

i)

Public Sector Banks

ii)

Private Sector Banks

Public Sector Banks

SBI and

Nationalized

Regional

Rural
SUBSIDIARIES

Banks

Banks

SBI and subsidiaries


This group comprises of the State Bank of India and its seven
subsidiaries viz., State Bank of Patiala, State Bank of Hyderabad, State
Bank of Travancore, State Bank of Bikaner and Jaipur, State Bank of
Mysore, State Bank of Saurashtra, State Bank of India
State Bank of India (SBI) is the largest bank in India. If one
measures by the number of branch offices and employees, SBI is the
largest bank in the world. Established in 1806as Bank of Bengal it is the
oldest commercial bank in the Indian subcontinent. SBI provides various
domestic, international and NRI products and services, through its vast
Page 36

network in India and overseas. With an asset base of $126 billion and its
reach, it is a regional banking behemoth. The government nationalized
the bank in1955, with the Reserve bank of India taking a 60% ownership
stake. In recent years the bank has focused on two priorities, 1), reducing
its huge staff through Golden handshakeschemes known as the Voluntary
Retirement Scheme, which saw many of its best and brightest defect to
the private sector, and 2), computerizing its operations.

The State Bank of India traces its roots to the first decade of19th century,
when the Bank of culcutta, later renamed theBank of bengal, was
established on 2 jun 1806. The government amalgamatted Bank of
Bengal and two other Presidency banks, namely, the Bank of Bombay
and the bank of Madras, and named the reorganized banking entity the
Imperial Bank of India. All these Presidency banks were incorporated
ascompanies, and were the result of theroyal charters. The Imperial Bank
of India continued to remain a joint stock company. Until the
establishment of a central bank in India the Imperial Bank and its early
predecessors served as the nation's central bank printing currency.
The State Bank of India Act 1955, enacted by the parliament of India,
authorized the Reserve Bank of India, which is the central Banking
Organisationof India, to acquire a controlling interest in the Imperial
Bank of India, which was renamed the State Bank of India on30th April
1955.
In recent years, the bank has sought to expand its overseas operations by
buying foreign banks. It is the only Indian bank to feature in the top 100

Page 37

world banks in the Fortune Global 500 rating and various other rankings.
According to the Forbes 2000 listing it tops all Indian companies.
Nationalized banks
This group consists of private sector banks that were nationalized. The
Government of India nationalized 14 private banks in 1969 and another 6
in the year 1980. In early 1993, there were 28 nationalized banks i.e., SBI
and its 7 subsidiaries plus 20 nationalized banks. In 1993, the loss making
new bank of India was merged with profit making Punjab National Bank.
Hence, now only 27 nationalized banks exist in India.

Regional Rural banks


These were established by the RBI in the year 1975 of banking
commission. It was established to operate exclusively in rural areas to
provide credit and other facilities to small and marginal farmers,
agricultural laborers, artisans and small entrepreneurs.
Private Sector Banks
Private Sector Banks

Old private
Sector Banks

new private
Sector Banks

Old Private Sector Banks


This group consists of the banks that were establishes by the privy
sectors, committee organizations or by group of professionals for the
cause of economic betterment in their operations. Initially, their
Page 38

operations were concentrated in a few regional areas. However, their


branches slowly spread throughout the nation as they grow.
New private Sector Banks
These banks were started as profit orient companies after the RBI opened
the banking sector to the private sector. These banks are mostly
technology driven and better managed than other banks.
Foreign banks
These are the banks that were registered outside India and had originated
in a foreign country. The major participants of the Indian financial
system are the commercial banks, the financial institutions (FIs),
encompassing term-lending institutions, investment

institutions, specialized financial institutions and the state-level


development banks, Non-Bank Financial Companies (NBFCs) and other
market intermediaries such as the stock brokers and money-lenders. The
commercial banks and certain variants of NBFCs are among the oldest of
the market participants. The FIs, on the other hand, are relatively new
entities in the financial market place.

Page 39

IMPORTANCE OF BANKING SECTOR IN A GROWING


ECONOMY

In the recent times when the service industry is attaining greater


importance compared to manufacturing industry, banking has evolved as
a prime sector providing financial services to growing needs of the
economy.

Banking industry has undergone a paradigm shift from providing


ordinary banking services in the past to providing such complicated and
crucial services like, merchant banking, housing finance, bill discounting
etc. This sector has become more active with the entry of new players like
private and foreign banks. It has also evolved as a prime builder of the
economy by understanding the needs of the same and encouraging the
development by way of giving loans, providing infrastructure facilities
and financing activities for the promotion of entrepreneurs and other
business establishments.

For a fast developing economy like ours, presence of a sound financial


system to mobilize and allocate savings of the public towards productive
activities is necessary. Commercial banks play a crucial role in this
regard.

The Banking sector in recent years has incorporated new products in their
businesses, which are helpful for growth. The banks have started to
provide

fee-based

services

like,

treasury

operations,

managing

derivatives, options and futures, acting as bankers to the industry during


Page 40

the public offering, providing consultancy services, acting as an


intermediary between two-business entities etc.At the same time, the
banks are reaching

out to other end of customer requirements like, insurance premium


payment, tax payment etc. It has changed itself from transaction type of
banking into relationship banking, where you find friendly and quick
service suited to your needs. This is possible with understanding the
customer needs their value to the bank, etc. This is possible with the help
of well organized staff, computer based network for speedy transactions,
products like credit card, debit card, health card, ATM etc. These are the
present trend of services. The customers at present ask for convenience of
banking transactions, like 24 hours banking, where they want to utilize
the services whenever there is a need. The relationship banking plays a
major and important role in growth, because the customers now have
enough number of opportunities, and they choose according to their
satisfaction of responses and recognition they get. So the banks have to
play cautiously, else they may lose out the place in the market due to
competition, where slightest of opportunities are captured fast.

Another major role played by banks is in transnational business,


transactions and networking. Many leading Indian banks have spread out
their network to other countries, which help in currency transfer and earn
exchange over it.

These banks play a major role in commercial import and export business,
between parties of two countries. This foreign presence also helps in
bringing in the international standards of operations and ideas. The
Page 41

liberalization policy of 1991 has allowed many foreign banks to enter the
Indian market and establish their business. This has helped large amount
of foreign capital inflow & increase our Foreign exchange reserve.

Another emerging change happening all over the banking industry is


consolidation through mergers and acquisitions. This helps the banks in
strengthening their empire and expanding their network of business in
terms of volume and effectiveness.

Page 42

CURRENT SCENARIOCurrently (2007), overall, banking in India is considered as fairly mature


in terms of supply, product range and reach-even though reach in rural
India still remains a challenge for the private sector and foreign banks.
Even in terms of quality of assets and capital adequacy, Indian banks are
considered to have clean, strong and transparent balance sheets-as
compared to other banks in comparable economies in its region. The
Reserve Bank of India is an autonomous body, with minimal pressure
from the government. The stated policy of the Bank on the Indian Rupee
is to manage volatility-without any stated exchange rate-and this has
mostly been true.
With the growth in the Indian economy expected to be strong for quite
some time-especially in its services sector, the demand for banking
services-especially retail banking, mortgages and investment services are
expected to be strong. M&As, takeovers, asset sales and much more
action (as it is unravelling in China) will happen on this front in India.

Page 43

In March 2006, the Reserve Bank of India allowed Warburg Pincus to


increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%.
This is the first time an investor has been allowed to hold more than 5%
in a private sector bank since the RBI announced norms in 2005 that any
stake exceeding 5% in the private sector banks would need to be vetted
by them. Currently, India has 88 scheduled commercial banks (SCBs) 28 public sector banks (that is with the Government of India holding a
stake), 29 private banks (these do not have government stake; they may
be publicly listed and traded on stock exchanges) and 31 foreign banks.
They have a combined network of over 53,000 branches and 17,000
ATMs. According to a report by ICRA Limited, a rating agency, the
public sector banks hold over 75 percent of total assets of the banking
industry, with the private and foreign banks holding 18.2% and 6.5%
respectively.

Page 44

Banking in India
1

Central Bank

Reserve Bank of India


State Bank

of India, Allahabad

Bank,

Andhra Bank, Bank of Baroda, Bank of India,


Bank of Maharastra,PUBJAB NATIONAL
2

Nationalised

BANK, Central Bank of India, Corporation

Banks

Bank, Dena Bank, Indian Bank, Indian


overseas Bank,Oriental Bank of Commerce,
Punjab and Sind Bank, Punjab National Bank,
UNION BANK, Union Bank of India, United
Bank of India, UCO Bank,and Vijaya Bank.
Bank of Rajastan, Bharath overseas Bank,
Catholic Syrian Bank, Centurion Bank of
Punjab, City Union Bank, Development

Private Banks

Credit Bank, Dhanalaxmi Bank, Federal


Bank, Ganesh Bank of Kurundwad, HDFC
Bank, ICICI Bank, IDBI, IndusInd Bank, ING
Vysya Bank, Jammu and Kashmir Bank,
Karnataka Bank Limited, Karur Vysya Bank,
Kotek Mahindra Bank, Lakshmivilas Bank,
Lord Krishna Bank, Nainitak Bank, Ratnakar
Bank,Sangli Bank, SBI Commercial and
International Bank, South Indian Bank, Tamil
Nadu Merchantile Bank Ltd., United Western
Bank, UTI Bank, YES Bank.

Page 45

STATE BANK OF INDIA

Not only many financial institution in the world today can claim the
antiquity and majesty of the State Bank Of India founded nearly two
centuries ago with primarily intent of imparting stability to the money
market, the bank from its inception mobilized funds for supporting both
the public credit of the companies governments in the three presidencies
of British India and the private credit of the European and India
merchants from about 1860s when the Indian economy book a significant
leap forward under the impulse of quickened world communications and
ingenious method of industrial and agricultural production the Bank
became intimately in valued in the financing of practically and mining
activity of the Sub- Continent Although large European and Indian
merchants

and

manufacturers

were

undoubtedly

thee

principal

beneficiaries, the small man never ignored loans as low as Rs.100 were
disbursed in agricultural districts against glad ornaments. Added to these
the bank till the creation of the Reserve Bank in 1935 carried out
numerous Central Banking functions.

Adaptation world and the needs of the hour has been one of the strengths
of the Bank, In the post depression exe. For instance when business
opportunities become extremely restricted, rules laid down in the book of
instructions were relined to ensure that good business did not go post. Yet
seldom did the bank contravenes its value as depart from sound banking
principles to retain as expand its business. An innovative array of office,
unknown to the world then, was devised in the form of branches, sub
branches, treasury pay office, pay office, sub pay office and out students
to exploit the opportunities of an expanding economy. New business
Page 46

strategy was also evaded way back in 1937 to render the best banking
service through prompt and courteous attention to customers.
A highly efficient and experienced management functioning in a well
defined organizational structure did not take long to place the bank an
executed pedestal in the areas of business, profitability, internal discipline
and above all credibility A impeccable financial status consistent
maintenance of the lofty traditions if banking an observation of a high
standard of integrity in its operations helped the bank gain a pre- eminent
status. No wonders the administration for the bank was universal as key
functionaries of India successive finance minister of independent India
Resource Bank of governors and representatives of chamber of
commercial showered economics on it.

Modern day management techniques were also very much evident in the
good old days years before corporate governance had become a puzzled
the banks bound functioned with a high degree of responsibility and
concerns for the shareholders. An unbroken records of profits and a fairly
high rate of profit and fairly high rate of dividend all through ensured
satisfaction, prudential management and asset liability management not
only protected the interests of the Bank but also ensured that the
obligations to customers were not met. The traditions of the past
continued to be upheld even to this day as the State Bank years itself to
meet the emerging challenges of the millennium.

Page 47

ABOUT LOGO

THE PLACE TO SHARE THE NEWS ...


SHARE THE VIEWS

Togetherness is the theme of this corporate loge of SBI where the world
of banking services meet the ever changing customers needs and
establishes a link that is like a circle, it indicates complete services
towards customers. The logo also denotes a bank that it has prepared to
do anything to go to any lengths, for customers.

The blue pointer represent the philosophy of the bank that is always
looking for the growth and newer, more challenging, more promising
direction. The key hole indicates safety and security.

Page 48

MISSION, VISION AND VALUES

MISSION STATEMENT:
To retain the Banks position as premiere Indian Financial Service Group,
with world class standards and significant global committed to excellence
in customer, shareholder and employee satisfaction and to play a leading
role in expanding and diversifying financial service sectors while
containing emphasis on its development banking rule.

VISION STATEMENT:
Premier Indian Financial Service Group with prospective world-class
Standards of efficiency and professionalism and institutional values.
Retain its position in the country as pioneers in Development banking.
Maximize the shareholders value through high-sustained earnings per
Share.
An institution with cultural mutual care and commitment, satisfying
and
Good work environment and continues learning opportunities.

VALUES:
Excellence in customer service
Profit orientation
Page 49

Belonging commitment to Bank


Fairness in all dealings and relations
Risk taking and innovative
Team playing

Page 50

PRODUCTS:

State Bank Of India renders varieties of services to customers


through the following products:

Personal Loan Product:


SBI Term Deposits
SBI Recurring Deposits
SBI Housing Loan
SBI Car Loan
SBI Educational Loan
SBI Personal Loan
SBI Loan For Pensioners
Loan Against Mortgage Of Property
Loan Against Shares & Debentures
Rent Plus Scheme
Medi-Plus Scheme
Rates Of Interest

SBI Housing loan


SBI Housing loan or Mortgage Loan schemes are designed to make it
simple for you to make a choice at least as far as financing goes!
Page 51

'SBI-Home Loans'
features:

No cap on maximum loan amount for purchase/ construction of


house/ flat

Option to club income of your spouse and children to compute


eligible loan amount

Provision to club expected rent accruals from property proposed to


compute eligible loan amount
Provision to finance cost of furnishing and consumer durables as
part of project cost

Repayment permitted upto 70 years of age

Free personal accident insurance cover

Optional Group Insurance from SBI Life at concessional premium


(Upfront premium financed as part of project cost)

Interest applied on daily diminishing balance basis

'Plus' schemes which offer attractive packages with concessional


interest rates to Govt. Employees, Teachers, Employees in Public
Sector Oil Companies.

Special scheme to grant loans to finance Earnest Money Deposits


to be paid to Urban Development Authority/ Housing Board, etc. in
respect of allotment of sites/ house/ flat

No Administrative Charges or application fee

Prepayment penalty is recovered only if the loan is pre-closed


before half of the original tenure (not recovered for bulk payments
provided the loan is not closed)

Provision for downward refixation of EMI in respect of floating


rate borrowers who avail Housing Loans of Rs.5 lacs and above, to
Page 52

avail the benefit of downward revision of interest rate by 1% or


more

In-principle approval issued to give you flexibility while


negotiating purchase of a property

Option to avail loan at the place of employment or at the place of


construction

Attractive packages in respect of loans granted under tie-up with


Central/ State Governments/ PSUs/ reputed corporates and tie-up
with reputed builders (Please contact your nearest branch for
details)

Page 53

SERVICES:

DOMESTIC TREASURY

SBI VISHWA YATRA FOREIGN TRAVEL CARD

BROKING SERVICES

REVISED SERVICE CHARGES

ATM SERVICES

INTERNET BANKING

E-PAY

E-RAIL

RBIEFT

SAFE DEPOSIT LOCKER

GIFT CHEQUES

MICR CODES
FOREIGN INWARD REMITTANCES

Page 54

ATM SERVICES

STATE BANK NETWORKED ATM SERVICES


State Bank offers you the convenience of over 8000 ATMs in India, the
largest network in the country and continuing to expand fast! This means
that you can transact free of cost at the ATMs of State Bank Group (This
includes the ATMs of State Bank of India as well as the Associate Banks
namely, State Bank of Bikaner & Jaipur, State Bank of Hyderabad,
State Bank of Indore, State Bank of Mysore, State Bank of Patiala, State
Bank of Saurashtra, and State Bank of Travancore) and wholly owned
subsidiary viz. SBI Commercial and International Bank Ltd., using the
State Bank ATM-cum-Debit (Cash Plus) card.
KINDS OF CARDS ACCEPTED AT STATE BANK ATMs
Besides State Bank ATM-Cum-Debit Card and State Bank International
ATM-Cum-Debit Cards following cards are also accepted at State Bank
ATMs: 1) State Bank Credit Card
2) ATM Cards issued by Banks under bilateral sharing viz. Andhra
Bank,Axis Bank, Bank of India, The Bank of Rajasthan Ltd., PUBJAB
NATIONAL BANK, Corporation Bank, Dena Bank, HDFC Bank, Indian
Bank, Indus Ind Bank, Punjab National Bank, UCO Bank and Union
Bank of India.
3) Cards issued by banks (other than banks under bilateral sharing)
displaying Maestro, Master Card, Cirrus, VISA and VISA Electron logos
Page 55

STATE BANK INTERNATIONAL ATM-CUM-DEBIT CARD

Eligibility:
All Saving Bank and Current Account holders having accounts with
networked branches and are:
18 years of age & above
Account type: Sole or Joint with Either or Survivor / Anyone or
Survivor
NRE account holders are also eligible but NRO account holders are
not.
Benefits:

Convenience to the customers traveling overseas

Can be used as Domestic ATM-cum-Debit Card

Available at a nominal joining fee of Rs. 200/-

Daily limit of US $ 1000 or equivalent at the ATM and US $


1000 or equivalent at Point of Sale (POS) terminal for debit
transaction

Purchase Protection*up to Rs. 5000/- and Personal Accident


cover*up to Rs. 2,00,000/

Charges for usage abroad: Rs. 150+ Service Tax per cash
withdrawal Rs. 15 + Service Tax per enquiry.

Page 56

State Bank ATM-cum-Debit (State Bank Cash plus) Card:


Indias largest bank is proud to offer you unparalleled convenience viz.
State Bank ATM-cum-Debit(Cash Plus) card. With this card, there is no
need to carry cash in your wallet. You can now withdraw cash and make
purchases anytime you wish to with your ATM-cum-Debit Card.
Get an ATM-cum-Debit card with which you can transact for FREE at
any of over 8000 ATMs of State Bank Group within our country.
SBI GOLD INTERNATIONAL DEBIT CARDS

E-PAY

Bill Payment at Online SBI (e-Pay) will let you to pay your Telephone,
Mobile, Electricity, Insurance and Credit Card bills electronically over
our Online SBI website

E-RAIL
Book your Railways Ticket Online.

Page 57

The facility has been launched wef Ist September 2003 in association
with IRCTC. The scheme facilitates Booking of Railways Ticket
Online.
The salient features of the scheme are as under:
All Internet banking customers can use the facility.

On giving payment option as SBI, the user will be redirected to


onlinesbi.com. After logging on to the site you will be displayed
payment amount, TID No. and Railway reference no.

. The ticket can be delivered or collected by the customer.

The user can collect the ticket personally at New Delhi reservation
counter .

The Payment amount will include ticket fare including reservation


charges, courier charges and Bank Service fee of Rs 10/. The Bank
service fee has been waived unto 31st July 2006.

Page 58

SAFE DEPOSIT LOCKER

For the safety of your valuables we offer our customers safe deposit vault
or locker facilities at a large number of our branches. There is a nominal
annual charge, which depends on the size of the locker and the centre in
which the branch is located.

NRI HOME LOAN

SALIENT FEATURES

Purpose of Loan
Loans to NRIs & PIOs can be extended for the following purposes.

To purchase/construct a new house / flat

To repair, renovate or extend an existing house/flat

To purchase an existing house/flat

To purchase a plot for construction of a dwelling unit.

To purchase furnishings and consumer durables, as a part of the


project cost

AGRICULTURE / RURAL
State Bank of India Caters to the needs of agriculturists and landless
agricultural labourers through a network of 6600 rural and semi-urban
branches. here are 972 specialized branches which have been set up in
different parts of the country exclusively for the development of
agriculture through credit deployment. These branches include 427
Agricultural Development Branches (ADBs) and 547 branches with
Page 59

Development Banking Department (DBDs) which cater to agriculturists


and 2 Agricultural Business Branches at Chennai and Hyderabad catering
to the needs of hitech commercial agricultural projects.

THEORETICAL BACKGROUND OF CREDIT RISK MANAGEMENT

CREDIT:
The word credit comes from the Latin word credere, meaning
trust. When sellers transfer his wealth to a buyer who has agreed to pay
later, there is a clear implication of trust that the payment will be made at
the agreed date. The credit period and the amount of credit depend upon
the degree of trust.

Credit is an essential marketing tool. It bears a cost, the cost of the


seller having to borrow until the customers payment arrives. Ideally, that
cost is the price but, as most customers pay later than agreed, the extra
unplanned cost erodes the planned net profit.

RISK :
Risk is defined as uncertain resulting in adverse out come, adverse
in relation to planned objective or expectation. It is very difficult o
find a risk free investment. An important input to risk management is
risk assessment. Many public bodies such as advisory committees
concerned with risk management. There are mainly three types of risk
they are follows
Market risk
Credit Risk
Operational risk
Page 60

Risk analysis and allocation is central to the design of any project


finance, risk management is of paramount concern. Thus
quantifying risk along with profit projections is usually the first
step in gauging the feasibility of the project. once risk have been
identified they can be allocated to participants and appropriate
mechanisms put in place.

Types of Financial Risks

Market Risk
Financial
Risks

Credit Risk
Operational Risk

MARKET RISK:
Market risk is the risk of adverse deviation of the mark to market value
of the trading portfolio, due to market movement, during the period
required to liquidate the transactions.

OPERTIONAL RISK:
Operational risk is one area of risk that is faced by all organization s.
More complex the organization more exposed it would be operational
risk. This risk arises due to deviation from normal and planned
Page 61

functioning of the system procedures, technology and human failure of


omission and commission. Result of deviation from normal functioning is
reflected in the revenue of the organization, either by the way of
additional expenses or by way of loss of opportunity.

CREDIT RISK:
Credit risk is defined as the potential that a bank borrower or
counterparty will fail to meet its obligations in accordance with agreed
terms, or in other words it is defined as the risk that a firms customer and
the parties to which it has lent money will fail to make promised
payments is known as credit risk

The exposure to the credit risks large in case of financial institutions,


such commercial banks when firms borrow money they in turn expose
lenders to credit risk, the risk that the firm will default on its promised
payments. As a consequence, borrowing exposes the firm owners to the
risk that firm will be unable to pay its debt and thus be forced to
bankruptcy.

CONTRIBUTORS OF CREDIT RISK:


Corporate assets
Retail assets
Non-SLR portfolio
May result from trading and banking book
Inter bank transactions
Derivatives
Settlement, etc
Page 62

Research Methodology
For the purpose of study secondary data has been used for this
purpose various articles, journals and annual reports of the bank has been
studied. In this project various ratios were studied to find out the financial
position of bank. These ratios are as follows:

1. Capital Adequacy Ratio

Capital
Risk

2. Debt Equity Ratio

Debit
Equity Funds

3. Net Turnover Margin Ratio

Net Profit

Net Sales (Operating Income)

4. Assets Turnover Ratio

Net Sales (Operating

Income)
Total Assets

5. Return on Equity

Net Income
Equity Share Capital

Page 63

6. Return on Assets Ratio :

Net Profits
Average Total Assets

7. Price Earnings Ratio

Market Price of Shares


Earnings per Share

8. Debt Assets Ratio

Debit
Total Assets

Page 64

Financial Statement Analysis


A financial statement analysis consists of the application of
analytical tools and techniques to the data in financial statements in order
to derive from them measurements and relationships that are significant
and useful for decision making.

Uses of Financial Statement Analysis:


Financial Statement Analysis can be used as a preliminary
screening tool in the selection of stocks in the secondary market. It can be
used as a forecasting tool of future financial conditions and results. It may
be used as process of evaluation and diagnosis of managerial, operating
or other problem areas.

Sources of Financial Information:


The financial data needed in the financial analysis come from
many sources. The primary source is the data provided by the company
itself in its annual report and required disclosures. The annual report
comprises of the income statement, the balance sheet, and the statement
of cash flows.

Tools of Financial Analysis:


In the analysis of financial statements, the analyst has a variety of
tools available to choose the best that suits his specific purpose. In this
report we will confine ourselves to Ratio Analysis based on information
provided from financial statements such as Balance Sheet and Profit &
Loss Account.
Page 65

Profit loss account

Mar 14

Mar 13

Mar 12 Mar 11 Mar 10

Income
Operating
income

32,369.69 32,747.36 38,250.39 39,467.92 28,457.13

Expenses
Material
consumed

2,816.93

1,925.79

1,971.70

2,078.90

1,616.75

305.79

236.28

669.21

1,750.60

1,741.63

4,909.00

7,440.42

7,475.63

6,447.32

4,946.69

Manufacturing
expenses
Personnel
expenses
Selling expenses
Administrative
expenses
Expenses
capitalized
Cost of sales

8,031.72

9,602.49 10,116.54 10,276.82

8,305.07

Operating profit

7,380.82

5,552.30

5,407.91

5,706.85

3,793.56

Other recurring

7.26

305.36

330.64

65.58

309.17
Page 66

Mar 14

Mar 13

Mar 12 Mar 11 Mar 10

7,388.08

5,857.66

5,738.55

income
Adjusted PBDIT

5,772.43

4,102.73

Financial
expenses
Depreciation
Other write offs

Adjusted PBT

16,957.15 17,592.57 22,725.93 23,484.24 16,358.50


562.44

619.50

678.60

578.35

544.78

5,194.08

3,557.95

10,131.51 12,354.42 17,665.98

Tax charges

1,609.33

1,600.78

1,830.51

1,611.73

984.25

Adjusted PAT

5,110.21

3,890.47

3,740.62

4,092.12

2,995.00

41.17

134.52

17.51

65.61

115.22

-2.17

-0.58

5,149.21

4,024.98

3,757.55

4,157.73

3,110.22

appropriation

8,613.59

6,834.63

6,193.87

5,156.00

3,403.66

Equity dividend

1,612.58

1,337.95

1,224.58

1,227.70

901.17

Nonrecurring
items
Other non cash
adjustments
Reported net
profit
Earnings before

Preference
dividend

Page 67

Dividend tax

Mar 14

Mar 13

Mar 12 Mar 11 Mar 10

202.28

164.04

151.21

149.67

153.10

6,798.73

5,332.63

4,818.07

3,778.63

2,349.39

Retained
earnings

Page 68

Cash Flow

Mar 14 Mar 13 Mar 12 Mar 11 Mar 10


Profit before tax

6,760.70

5,345.32

Net cash flowoperating activity

-6,908.92

5,116.97

5,056.10

1,869.21 14,188.49 11,631.15 23,061.95

Net cash used in


investing activity

3,648.04

-2,108.82

6,150.73

3,857.88 17,561.11 18,362.67

4,283.20

1,382.62

1,625.36 29,964.82 15,414.58

Net cash used in fin.


Activity
Net inc/dec in cash
and equivalent

-4,783.61

8,907.13 -8,074.57

683.55 20,081.10

Cash and equivalent


begin of year

38,873.69 29,966.56 38,041.13 37,357.58 17,040.22

Cash and equivalent


end of year

34,090.08 38,873.69 29,966.56 38,041.13 37,121.32

Page 69

BALANCE SHEET
Balance Sheet of SBI

------------------- in Rs. Cr. -------------------

Bank
Mar

Mar '10 Mar '09 Mar '08 Mar '07

'11
12

12 mths

mths

12 mths

12 mths 12 mths

Capital
and Liabilities:
Total Share Capital

1,151.
82

Equity Share

1,15

Capital

1.82

Share Application
Money
Preference Share
Capital

1,114.89 1,463.29 1,462.68 1,249.34

1,114.89 1,113.29 1,112.68

899.34

0.29

0.00

0.00

0.00

0.00

0.00

0.00

350.00

350.00

350.00

53,9
Reserves

38.8

50,503.48 48,419.73 45,357.53 23,413.92

2
Revaluation
Reserves

0.00

0.00

0.00

0.00

0.00

55,0
Net Worth

90.9

51,618.37 49,883.02 46,820.21 24,663.26

3
Page 70

225,
Deposits

602.

202,016.60

11

218,347.8 244,431.0 230,510.1


2

109,
Borrowings

554.

94,263.57 67,323.69 65,648.43 51,256.03

28
335,
Total Debt

156.

296,280.17

39
Other Liabilities &
Provisions

15,9
86.3

15,501.18 43,746.43 42,895.39 38,228.64

5
406,

Total Liabilities

285,671.5 310,079.4 281,766.2

233.
67

363,399.72

379,300.9 399,795.0 344,658.1


6

Page 71

Mar '11

Mar '10 Mar '09 Mar '08

12 mths

12 mths

12 mths

Mar '07

12 mths 12 mths

Assets
Cash & Balances
with RBI
Balance with Banks,
Money at Call
Advances

Investments
Gross Block
Accumulated
Depreciation
Net Block
Capital Work In
Progress
Other Assets

Total Assets

20,906.97

27,514.29 17,536.33 29,377.53

13,183.11

11,359.40 12,430.23 8,663.60

216,365.9
0
134,685.9
6

120,892.80

8
18,414.4
5

218,310.8 225,616.0 195,865.


5

60

103,058.3 111,454.3 91,257.8


1

9,107.47

7,114.12 7,443.71 7,036.00 6,298.56

4,363.21

3,901.43 3,642.09 2,927.11 2,375.14

4,744.26

3,212.69 3,801.62 4,108.89 3,923.42

0.00

16,347.47
406,233.6
7

Contingent Liabiliti 883,774.7


es

181,205.60

18,706.8

0.00

0.00

0.00

19,214.93 24,163.62 20,574.63

363,399.71

694,948.84

189.66
16,300.2
6

379,300.9 399,795.0 344,658.


6

11

803,991.9 371,737.3 177,054.


2

18
Page 72

Bills for collection

47,864.06

38,597.36 36,678.71 29,377.55

22,717.2
3

Page 73

Ratio Analysis
Capital Adequacy Ratio:
A measure of a bank's capital. It is expressed as a percentage of a
bank's risk weighted credit exposures.

Table: 1.1
Mar 10

Mar 11

Mar 12

Mar 13

Mar 14

11.12

11.56

10.09

11.93

13.21

Figures: 1.1
14
12

13.21
11.12

11.93

11.56
10.09

10
8
6
4
2
0
Mar 10

Mar 11

Mar 12

Mar 13

Mar 14

(Source: Calculated from the annual report of SBI Bank .)


Page 74

Capital adequacy ratio (CAR) is a ratio of a bank's capital to its


risk. National regulators track a bank's CAR to ensure that it can absorb a
reasonable amount of loss and are complying with their statutory Capital
requirements. The formula for Capital Adequacy Ratio is, (Tier 1 Capital
+ Tier 2 Capital)/Risk Weighted Assets. Capital adequacy ratio is the
ratio which determines the capacity of the bank in terms of meeting the
time liabilities and other risks such as credit risk, operational risk, etc. In
the simplest formulation, a bank's capital is the "cushion" for potential
losses, which protects the bank's depositors or other lenders. Here, in case
of SBI Bank we can see that its CAR showed a sudden dip in the year
2008 but after that it has shown a steady rise for the next 2 years which is
a good sign for its depositors and investors.

Page 75

Debt-Equity Ratio:
A measure of a company's financial leverage calculated by
dividing its total liabilities by stockholders' equity. It indicates what
proportion of equity and debt the company is using to finance its assets.

Table: 1.2
Mar 10

Mar 11

Mar 12

Mar 13

Mar 14

69.93

84.22

102.11

186.19

234.24

Figure: 1.2
250

234.24
186.19

200

150
102.11
100

84.22
69.93

50

0
Mar 10

Mar 11

Mar 12

Mar 13

Mar 14

(Source: Calculated from the annual report of SBI Bank .)

Page 76

The debt-to-equity ratio (D/E) is a financial ratio indicating the


relative proportion of shareholders' equity and debt used to finance a
company's assets. Here, in case of SBI Bank we can see that the DebtEquity ratio has increased over the years. This is because its equity
capital showed no growth from the year 2006 to 2008 and it decreased by
around Rs250 crore in 2009 and remained the same for the year 2010. But
its debt capital has shown a steady increase over the past 5 years. From
this we can infer that since SBI Bank is a public sector undertaking it
depends much more on debt capital rather than equity capital.

Page 77

CURRENT RATIO:
Current Ratio may be defined as the relationship between current
assets and current liabilities.

Table: 1.3
Mar 10

Mar 11

Mar 12

Mar 13

Mar 14

65.17

79.27

98.16

182.22

238.24

Figure: 1.3
300
238.24

250
200

182.22

150
100

98.16
65.17

79.27

50
0
Mar 10

Mar 11

Mar 12

Mar 13

Mar 14

(Source: Calculated from the annual report of SBI Bank .)


A relatively high current ratio is an indication that the firm is liquid
and has the ability to pay its current obligations in time as and when they
become due. An increase in the current ratio represent improvement in
the liquidity position of the firm while a decrease in the current ratio
indicates that there has been deterioration in the liquidity position of the
firm.

Page 78

QUICK RATIO:
Quick ratio also known as Acid test or Liquid Ratio is more
rigorous test of liquidity than the current ratio.

Table: 1.4
Mar 10

Mar 11

Mar 12

Mar 13

Mar 14

62.16

72.37

96.14

165.46

213.26

Figure: 1.4
250
213.26
200
165.46
150
96.14

100
62.16

72.37

50

0
Mar 10

Mar 11

Mar 12

Mar 13

Mar 14

(Source: Calculated from the annual report of SBI Bank .)

Usually, a high test ratio is an indication that the firm is liquid and
has the ability to meet its current or liquid liabilities in time and on the
other hand a low quick ratio represent that the firms liquidity position is
not good.

Page 79

DEBT TURNOVER RATIO:


Debt turnover ratio indicates the velocity of debt collection of firm. In
simple words, it indicates the number of times average debtors are
turnover during the year.

Table: 1.5
Mar 10

Mar 11

Mar 12

Mar 13

Mar 14

15.46

16.45

11.87

17.46

19.25

Figure: 1.5
25
19.25

20
15.46

17.46

16.45

15
11.87
10

0
Mar 10

Mar 11

Mar 12

Mar 13

Mar 14

(Source: Calculated from the annual report of SBI Bank .)

Debtors Turnover indicates the number of times the debtors are turned
over during a year. Generally, the higher the value of debtors turnover the

Page 80

more efficient is the management of debtors and more liquid are the
debtors.

Advances to Assets:
A high ratio of Advances to Assets would mean that the chances of Non
Performing Assets formation are also high, which is not a good scenario
for a bank.

Table: 2.1
Mar 10

Mar 11

Mar 12

Mar 13

Mar 14

0.60

0.63

0.61

0.62

0.60

Figure: 2.1
0.635

0.63

0.63
0.625

0.62

0.62
0.615

0.61

0.61
0.605

0.6

0.6

0.6
0.595
0.59
0.585
Mar 10

Mar 11

Mar 12

Mar 13

Mar 14

(Source: Calculated from the annual report of SBI Bank .)


Page 81

Advances to Asset is also a good indicator of a firms Capital


Adequacy. A high ratio of Advances to Assets would mean that the
chances of Non Performing Assets formation are also high, which is not a
good scenario for a bank. This would mean the credibility of its assets
would go down. In case of SBI Bank we can see that it is able to
maintain a pretty steady ratio of its Advances to Assets which means the
credibility of its assets is good.

Page 82

Government Securities to Total Investments:


The ratio of Government Securities to Total investments shows
how safe are the companys investments.

Table: 2.2
Mar 10

Mar 11

Mar 12

Mar 13

Mar 14

0.81

0.83

0.83

0.86

0.86

Figure: 2.2
0.87

0.86

0.86

Mar 13

Mar 14

0.86
0.85
0.84

0.83

0.83

Mar 11

Mar 12

0.83
0.82

0.81

0.81
0.8
0.79
0.78
Mar 10

(Source: Calculated from the annual report of SBI Bank .)

The ratio of Government Securities to Total investments shows


how safe are the companys investments. Here, in case of SBI Bank we
Page 83

can see that its ratio of investments in Government Securities to Total


Investments is very high and it has remained quite steady over the years
with minimal fluctuations. The high ratio tells that SBI Bank s investment
policy is conservative and their investments are safe.

Page 84

Earning Quality
Percentage Growth in Net Profits

Table: 3.1

(Per cent)

2011

0.61

2012

0.30

2013

0.35

2014

0.81

Figure: 3.1

(Source: Calculated from the annual report of SBI Bank .)

As per the analysis it can be seen that the net profit of the bank is
going continuously from the year 2008 onwards. In the year 2007 -08 the
net profit was decreased because of the subprime crises in USA. And again
Page 85

it was increased in 2008-09 as RBI did not stopped money flow in the
market.

Page 86

Net Profit to total Assets

Table: 3.2

(Per cent)

2010

0.0031

2011

0.0042

2012

0.0049

2013

0.0053

2014

0.0078

Figure: 3.2

(Source: Calculated from the annual report of SBI Bank .)

Net profit to total assets is continue increasing from 2006 onwards .It
means the bank is able to utilize its assets.

Page 87

Interest Income to Total Income

Table: 3.3

(Per cent)

2010

7.61

2011

7.86

2012

8.39

2013

8.79

2014

8.06

Figure: 3.3

(Source: Calculated from the annual report of SBI Bank .)

Page 88

Non-Interest Income to Total Income

Table: 3.4

(Per cent)

2010

0.30

2011

0.32

2012

0.36

2013

0.35

2014

0.32

Figure: 3.4

(Source: Calculated from the annual report of SBI Bank .)

Page 89

Summary of Ratios
Ratios
Mar

Mar

Mar

Mar

Mar

14

13

12

11

10

Adjusted EPS (Rs)

44.37

34.90

33.60

36.78

33.30

Adjusted cash EPS (Rs)

49.25

40.45

39.70

41.97

39.36

Reported EPS (Rs)

44.73

36.10

33.76

37.37

34.59

Reported cash EPS (Rs)

49.61

41.66

39.85

42.56

40.64

Dividend per share

14.00

12.00

11.00

11.00

10.00

64.08

49.80

48.58

51.29

42.19

478.31

463.01

444.94

417.64

270.37

478.31

463.01

444.94

417.64

270.37

281.04

293.74

343.59

354.71

316.45

358.12

356.94

351.04

346.21

199.52

Per share ratios

Operating profit per


share (Rs)
Book value (excl rev res)
per share (Rs)
Book value (incl rev res)
per share (Rs.)
Net operating income per
share (Rs)
Free reserves per share
(Rs)

Page 90

Mar

Mar

Mar

Mar

Mar

14

13

12

11

10

Operating margin (%)

22.80

16.95

14.13

14.45

13.33

Gross profit margin (%)

21.06

15.06

12.36

12.99

11.41

Net profit margin (%)

15.91

12.17

9.74

10.51

10.81

17.52

13.64

11.45

11.81

12.30

9.27

7.53

7.55

8.80

12.31

9.35

7.79

7.58

8.94

12.79

42.97

44.72

56.72

62.34

82.46

0.01

0.01

0.01

4.10

3.91

4.42

5.27

9.50

19.62

20.35

18.46

15.95

9.52

3.55

4.60

5.14

5.61

4.52

Profitability ratios

Adjusted cash margin


(%)
Adjusted return on net
worth (%)
Reported return on net
worth (%)
Return on long term
funds (%)
Leverage ratios
Long term debt / Equity
Total debt/equity
Owners fund as % of
total source
Fixed assets turnover
ratio
Liquidity ratios
Page 91

Mar

Mar

Mar

Mar

Mar

14

13

12

11

10

1.73

1.94

0.78

0.72

0.61

0.11

0.13

0.13

0.10

0.08

15.86

14.70

5.94

6.42

6.04

35.23

37.31

36.60

33.12

33.89

(cash profit)

31.76

32.33

31.00

29.08

28.84

Earning retention ratio

64.49

61.40

63.23

66.35

64.80

68.01

66.70

68.87

70.51

70.22

39.77

44.79

49.41

52.34

65.12

0.43

0.33

0.25

1.25

1.25

1.34

1.26

1.20

1.20

1.22

Current ratio
Current ratio (inc. st
loans)
Quick ratio
Inventory turnover ratio
Payout ratios
Dividend payout ratio (net
profit)
Dividend payout ratio

Cash earnings retention


ratio
Coverage ratios
Adjusted cash flow time
total debt
Financial charges
coverage ratio
Fin. charges cov. ratio
(post tax)

Page 92

Component ratios
Material cost component (%
earnings)
Selling cost Component

0.94

0.72

1.74

4.43

6.12

0.83

0.80

0.75

0.78

0.80

478.31

463.01

444.94

417.64

Exports as percent of total


sales
Import comp. in raw mat.
Consumed
Long term assets / total
Assets
Bonus component in equity
capital (%)

Book Value (Rs)

Page 93

270.37

CONCLUSION
The balance-sheet along with the income statement is an important
tool for investors and many other parties who are interested in it to gain
insight into a company and its operation. The balance sheet is a snapshot
at a single point of time of the companys accounts- covering its assets,
liabilities and shareholders equity. The purpose of the balance sheet is to
give users an idea of the companys financial position along with
displaying what the company owns and owes. It is important that all
investors know how to use, analyze and read balance-sheet. P & L
account tells the net profit and net loss of a company and its
appropriation. In the case of SBI Bank , during fiscal 2008, the bank
continued to grow and diversify its assets base and revenue streams. Bank
maintained its leadership in all main areas such as retail credit, wholesale
business, international operation, insurance, mutual fund, rural banking
etc. Continuous increase in the number of branches, ATM and electronic
channels shows the growth take place in bank. Trend analysis of profit &
loss account and balance sheet shows the % change in items of p & l a/c
and balance sheet i.e. % change in 2006 from 2005 and %change in 2007
from 2006. It shows that all items are increased mostly but increase in
this year is less than as compared to increase in previous year. In p& l a/c,
all items like interest income, non-interest income, interest expenses,
operating expenses, operating profit, profit before tax and after tax is
increased but in mostly cases it is less than from previous year but in
some items like interest income, interest expenses, provision % increase
is more. Some items like tax, depreciation, lease income is decreased.
Similarly in balance sheet all items like advances, cash, liabilities, and
Page 94

deposits are increased except borrowing switch is decreased. % increase


in some item is more than previous year and in some items it is less.
Ratio analysis of financial statement shows that banks current
ratio is better than the quick ratio and fixed/worth ratio. It means bank has
invested more in current assets than the fixed assets and liquid assets. The
cash flow statement shows that net increase in cash generated from
operating and financing activities is much more than the previous year
but cash generated from investing activities is negative in both years.
Therefore analysis of cash flow statement shows that cash inflow is more
than the cash outflow in SBI Bank . Thus, the ratio analysis and trend
analysis and analysis of cash flow statement show that SBI Bank s
financial position is good. Banks profitability is increasing but not at
high rate. Banks liquidity position is fair but not good because bank
invests more in current assets than the liquid assets. As we all know that
SBI Bank is on the first position among the entire private sector bank of
India in all areas but it should pay attention on its profitability and
liquidity. Banks position is stable.

Page 95

SUGGESTIONS
Some of the recommendation and suggestion are as follows:
The attention is required on the areas of growth, profitability, service
level and building talent.
To increase the profit of bank, bank should decrease their operating
expenses and increase their income.
To increase its liquidity, bank should keep some more cash in its hand
instead of giving more and more advances.
Introduce quality consciousness and standardization of the work
system and procedures.
Make manager competitive and introduce spirit of market-orientation
and culture of working for customer satisfaction.
There is need to build the knowledge and skill bases among the
employ eosin the context of technology.
Performance measure should not only cover financial aspects i.e.
quantitatively aspects but also the qualitative aspects.
It is high time to focus on work than the work-achieved.
Bank should increase its retail portfolio.
Page 96

Bank should manage its all risk such as credit, market and operational
risk properly and should be managed by a person who is highly skilled
and qualified.

Page 97

REFERENCES
Reports: Annual Reports of SBI Bank .

Websites:

http://www.seminarprojects.com/Thread-mba-project-topics

http://www.sharetermpapers.com/

Page 98

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